UK shipyards set to shed jobs

The BBC has learnt that major job losses will be announced later this week in shipyards across the UK.

However, I understand that Scotland's iconic Govan shipyard will not close despite the fact that has been discussed behind the scenes in recent weeks.

This is bound to renew speculation about the future of Portsmouth's shipyard.

Sources say that many hundreds of jobs will be lost - perhaps over 1,000 - not just at Govan and Scotstoun, the other shipyard on the Clyde, but also at Portsmouth. Some of the jobs lost may be replaced by a new contract to build new Type 26 frigates.

BAE Systems has yet to announce which UK shipyard will win this new work.

A well-placed source told me that the government was "acutely conscious of the politics of the Clyde" ahead of next year's Scottish Independence referendum.

Those campaigning against independence have often warned that it would lead to the closure of Scotland's shipyards. A decision to close them now would be regarded as a political gift to Alex Salmond.

If the Scottish yards gain new work some in the south west of England may complain that they have lost out for political reasons. Last year the head of BAE Systems announced that one of its major shipyards could be closed.

The job losses will result from the completion of work on the building of two new aircraft carriers (the numbers involved are much higher than for building other Royal Navy ships) and from a huge increase in the costs of that project.

It emerged yesterday that the government is planning to announce that it will need to spend an extra £800m on the carriers taking the total costs to over £6 billion which is double the original estimate. Beyond the carriers, there are currently no new orders on the books of the two Scottish yards.

The announcement by BAE Systems is expected on Thursday morning and will be followed later that day by a Commons statement from the Defence Secretary Philip Hammond.

The government has been trying to negotiate a reduction in the future costs of the aircraft carriers contract to ensure that any future increase in costs is equally shared between the taxpayer and the company and not, as now, largely by the Treasury.

The job losses may not take effect immediately because some work on the aircraft carriers is planned until 2015.

There are currently 3200 people employed by BAE across Govan and Scotstoun and 1200 employed in shipbuilding in Portsmouth (although in total 4100 are employed by BAE in the surrounding area).